There are commonalities shared by all demand planning, forecasting and analytics roles and organizations, including levels of maturity. Understanding these maturity levels allows you assess your people, process, and technology against a set of external benchmarks, best practices, or even ‘next practices’. Knowing your maturity level is crucial to developing further.
Maturity is indicated by evaluating an organization across several domains and across a number of ‘maturity levels’. Looking specifically at the demand planning function, they generally find themselves at one of three broad levels from the ‘essential’, progressing to ‘next level’,then to a mature or ‘vanguard’ predictive analytics and planning function. Now, understand that while people and culture may be at the ‘next level’, your technology may be still be at the early stages and in the ‘essential’ level. That said, with an honest assessment of your forecasting and planning function, that you will fall roughly into one of the following categories.
This is the first level or stages in a demand planning and analytics journey. This refers to newer functions or sometimes even an existing function within an established organization that are still growing, or still in a reaction mode. Either way, demand planning is underappreciated and underutilized. Common characteristics are a lack of tools and lack of consistent or available data and most forecasts are based primarily on year over year growth. As a function, there may be ambiguous roles and demand planners act merely as aggregators and were placed there from another position, and can even have other responsibilities.
As companies progress through this level they establish many foundational components of forecasting and demand planning but usually for a single use such as an input for gross requirements for operations or summation of sales targets for budgets. While in time you may talk about consensus, models, forecasts, you should spend most of your time on a singular focus for the demand plan and educating, defending, and explaining past performance of that plan.
Key Initiatives include:
- Identify an executive-level sponsor to support the process and ensure buy-in from key stakeholders.
- Establish a repeatable, transparent process for demand planning.
Recommended Reading: “How to Win the Support of Top Management for demand planning”
Your journey is gaining momentum. Demand planning is a work in progress. A more formal planning process should start to become standardized. At this level, companies either have an influential champion that encourages demand planning or the organization progresses to a place where they need to start anticipating more and planning ahead. Both come with the creation of a more standardized and centralized function. With this comes more designated roles and responsibilities that report through a business unit or functions such as Supply Chain, Finance or Sales.
Without a paradigm shift in thinking and seeing analytics and demand planning as a competitive advantage, most companies never progress from this level. That said, there is generally still a perceived value in demand planning and desire to improve the function at this level. This leads to advancements and establishment of many best practices as you go through this stage. The most successful can fully achieve a one number attitude, develop formalized workflows, measure uncertainty and performance, and use advanced analytics. Unfortunately, without changing the company’s thought process, the focus of a majority of these efforts is still usually to improve a plan than drives the business.
Key Initiatives include:
- Extend the current demand-forecasting system to incorporate collaborative workflows for achieving internal consensus.
- Establish strong win-win relationships with key customers and partners to support segmentation efforts.
Recommended Reading: “Collaborative Planning: Win Together Or Die Alone”
You are part of an elite group and are excelling and most likely are, or soon will be, an integral part of corporate strategy. At this stage, demand planning focuses on creating value for the enterprise and prioritizing continuous improvement initiatives. The company as a whole has matured as well and is now looking to orchestrate their outcomes, or the company is innovative and sees analytics and centralized planning as a strategic asset. An Analytics and Planning department may be elevated to a more unbiased centralized function with a variety of specialized roles and teams that support multiple purposes and enables decision making across the organization. At a minimum the role, skills, process, technology, and capabilities are elevated and used to shape demand, synchronize business processes, and create analytical driven organization.
While we cannot fully embrace or imagine what the best of the best will be in the future, the mature predictive analytics and planning organizations in this level have dedicated resources. There is special attention to the selection and alignment of technology and system architecture to support process capabilities. Analytics is noticeably more advanced and inputs more complex and, at the same time, latency in the process is considerably less with many parts now automated. The measurement of success becomes the success of the entire organization and you no longer are focused on a plan or defending a number but helping enable the business to grow and make better decisions.
Key Initiatives include:
- Develop a centralized Predictive Analytics and Planning Functions and focus on core competencies and strategy.
- Enhance technology platforms and invest in systems of innovation to support future business processes.